Microtec’s refinancing plan forges ahead with firm’s help

Saturday, January 1, 2005

ST-AUGUSTIN, Quebec - Microtec Enterprises ended its year on a high note of sorts, announcing an agreement with Securex Investments to develop a new alarm entity that combines subscribers from both companies.

The plan calls for 100,000 Microtec alarm subscribers to be grouped with 18,000 alarm subscribers with Securex Master Limited Partnership under a new entity, according to Len Suderman, president of Securex. Although no decision has been made on the name of the new alarm entity as of yet, Suderman said it may be known as the Alarm Co. Interest Trust.

The announcement is another step in Microtec’s plans to reorganize the company, which has struggled amidst debt due to numerous acquisitions in the late1990s. The company entered into protection under Canada’s Companies Creditors Arrangement Act - the equivalent to Chapter 11 protection in the United States - in the beginning of November.

The plan put forth to create the new organization still needed to meet court approval, but Suderman said Securex has everything in place it needs to proceed.

“We are proceeding along that path with the company’s blessing,” he said.

According to Daniel Tardif, communications director at Microtec, this plan is another avenue for Microtec to follow in an effort to settle debts with its creditors.

“Microtec as a company will be keeping its identity,” Tardif said, “but new investors could replace the old bank, which assists us with paying back creditors and establishing cash flow.”

Securex, a financial provider to the alarm industry that also has holds account portfolios, currently holds almost a 20 percent interest in Microtec. It has raised $99 million for this venture to assist the company with its restructuring.

Shareholders would have the option of exercising a payoff of 40 cents on its shares or may choose to participate in the new venture.

According to Tardif, the next step in the company’s process is asking the court for an extension of its CCAA status for 60 days, which it planned to ask for in mid-December.

“We’re going to meet with the court to make an extension of the deal to finalize the refinancing situation,” Tardif said.

As of press time, the court had not issued an extension, but Tardif was confident that the answer would be favorable for the company.

“We have serious investors and a solution,” he said. “It sounds like it is impossible that the courts will not answer this positively.”

If the plan is approved, 118,000 alarm monitoring subscribers will be part of the new operation, which Suderman said will grow through traditional means.

“We will continue to grow the entity through acquisition and organic growth,” he said.